Sunday, March 6, 2011

Quiggin's Zombie Economics

Zombie Economics came out last year and I flagged it then but haven't posted on it before now. One interesting feature of the book is that it is almost entirely a blog creation, spurred by comments on Quiggin's blog and motivated and encouraged by other bloggers. Quiggin made chapters available on Crooked Timber blog as he wrote them. All in all, an interesting model of writing a book.

The book is effectively five essays arguing against what Quiggin sees as being destructive economic ideas that have contributed to the global economic crisis. Chapter 1 argues that the idea of a "Great Moderation" of business cycles is absurd. Chapter 2 argues against the strong form of the efficient market hypothesis. Chapter 3 takes aim at Dynamic Stochastic General Equilibrium and real business cycle theories. Chapter 4 argues against the trickle-down theories that argue that reducing taxes for the very rich will ultimately help the poor by stimulating investment and consumption. Chapter 5 argues that attempts to privatize core government services in health and education have been a failure.

Overall, Quiggin pushes for a methodology of economics with far more emphasis on realism and empirical validation rather than theoretical rigour. He is staunchly Keynesian in his belief that the government should actively intervene to regulate business cycles and is also strong in the view that an explict focus on income and wealth distribution should be an important plank of policy. A great book full of big and bold ideas and one to be read and argued about.